PAROW-based diamond mining group Trans Hex looked dead and buried in 2019 after its subsidiary West Coast Resources (the old Namqualand mines bought from De Beers) was placed into liquidation. But indications are that a new look Trans Hex is regaining some shine.
The diamond miner delisted from the JSE two years ago, which means there is no official insight into the operations. But Astoria, which holds a 35% stake in Trans Hex, issued some interesting comments in its half-yearly report to end June recently.
Astoria noted that Trans Hex had benefited from the restructuring implemented post its delisting, which led to a dramatic reduction in costs. What’s more, as the diamond trade normalised after the lifting of lock down restrictions so diamond prices also “increased substantially”.
Astoria said the Somiluana mine in Angola achieved good sales prices during this period. “Higher oil prices further alleviated the dollar shortages in Angola, which made it easier for Trans Hex to repatriate funds to South Africa.”
Astoria said Trans Hex now generated a healthy cash flow – albeit’ lumpy due to the friction of remitting currency out of Angola. Over the past six months Astoria received its first dividend of R3.5 million from this investment.
Interestingly Astoria values its 35.7% stake in Trans Hex at a 30% discount to the group’s net asset value – which equates to R53 million. This R53 million figure infers a value of around R150 million for Trans Hex – which is actually less than the R225 million the group and other partners paid for West Coast Resources.
With Trans Hex seemingly on firmer financial footing, it will be interesting to see if there is any enthusiasm for acquiring other diamond mining operations to ensure operational diversity and build scale.
